A Detroit insurance tax?
Motorists in Detroit pay the highest auto insurance premiums, according to filings with the state insurance department. In the map below are the Census tract-level “factor” differences in personal injury protection — typically he most expensive component of a drivers’ insurance premium — for AAA of Michigan for 2015. They show either the discount or the additional amount motorists are charged depending on where they live. Zoom in on Metro Detroit to see how high rates are affected.
Source: State rate filing by AAA of Michigan.
Motorists in Detroit pay as much as seven times what motorists elsewhere would pay, no matter their driving record, age, gender or credit standing. Insurance companies say that’s because the city has higher claim rates and claim costs.
State Sen. Coleman A. Young II isn’t buying it. “This map is as discriminatory as it is disgusting,” Coleman wrote to Bridge after being sent copies of the map. “This is the definition of redlining. I’m stunned and furious.”
Redlining is the practice of charging different rates to residents of some geographic areas based on the race or ethnicity of the population.
When mapped, the differences are stark: In much of the state, motorists are given a discount on personal injury protection, the largest single portion of a premium. In parts of Ottawa and Cass counties in western Michigan, motorists get their personal injury premiums cut in half from the base rate because of where they live. Yet in parts of Detroit and three Census tracts in Dearborn, motorists pay 229 percent more than the base rate.
Here’s an example: if the baseline personal injury premium in the state was $1,000, it would cost $470 in the discounted Ottawa and Cass Census tracts, yet $3,296 in those high-cost areas of Detroit and Dearborn.
Huge differences are just miles apart: In southwest Detroit, motorists are charged double for living there yet just a few miles south in Wyandotte, motorists get a 20 percent discount for the same coverage.
Michigan used to have limits on territorial rate differences, but abolished those limits in 1996. Now, insurance companies can charge more — or less — based on ZIP codes or Census tracts.
Bridge looked at the state filings of Allstate and AAA of Michigan, and both showed similar patterns of rate differential based on geography. The companies say they face higher claim costs in those areas.
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